The Federal Reserve recently provided forward guidance on lowering interest rates. Business owners are eager to understand how these potential changes might impact their strategies and the broader economy for the fourth quarter and into 2025. To shed some light on this, we consulted ACT Capital Advisors’ CEO, Bob Hild, for his expert insights.

1. Housing Costs
   Lower interest rates will further increase housing costs. We are already short by 4.5 million housing units, and with demand exceeding supply, reduced borrowing costs will only drive prices higher, exacerbating inflation. There will likely be political pressure from Washington to enhance affordable housing through fiscal and monetary policies, but substantial progress will depend on local governments reducing regulatory and development costs.
   
2. Economic Turning Point
   This could be the turning point many business owners have been waiting for. Lower interest rates signal the end of economic uncertainty, encouraging owners to invest in growth initiatives and acquisition opportunities. Should business owners wait too long, they might miss the golden opportunity to create wealth. History has shown that the greatest wealth is often created during times of economic uncertainty.
   
3. M&A Activity
   Private equity firms are sitting on $2.5 trillion in investable capital (“dry powder”), which they need to deploy over the next couple of years to provide the promised yield to their limited partners. Strategic buyers are sitting on $4 trillion in excess capital they need to deploy. A strengthening economic environment combined with excess capital will push valuations to near-record highs, creating a selling window. However, like all windows, this opportunity will have a limited lifespan.

It can take a business anywhere from six months to a year to properly prepare for an exit. You don’t want to be one of those business owners who hung on too long and lost out on the opportunity, saying, “If only I had sold when…”

About ACT Capital Advisors
ACT Capital Advisors is a premier mergers & acquisitions (M&A) firm representing companies in all industries across North America. ACT has a 40-year history of deal-making, closing 250+ transactions, and unlocking over $2.5 billion in wealth for its clients. To learn more, visit www.actcapitaladvisors.com.